The Following Account Balances at the Beginning of January Were $\quad$

question 278

Essay

The following account balances at the beginning of January were selected from the general ledger of Bluestone Industries:
Work in process inventory $\quad$$\quad$ $0
Raw materials inventory $\quad$$\quad$$\quad$ $30,900
Finished goods inventory $\quad$$\quad$$\quad$ $54,800

Additional data:
1. Actual manufacturing overhead for January amounted to $80,500.
2. Total direct labour cost for January was $70,000; actual direct labour hours for January were 4,200.
3. The predetermined manufacturing overhead rate is based on direct labour hours. The budget for the year called for $350,000 of direct labour cost and $425,000 of manufacturing overhead costs. Estimated direct labour hours for the year were expected to be 20,000.
4. The only job unfinished on January 31 was Job No. 449, for which total direct labour charges were $22,000 (1,200 direct labour hours) and total direct material charges were $17,600.
5. Cost of direct materials placed in production during January totaled $129,500. There were no indirect material requisitions during January.
6. January 31 balance in raw materials inventory was $30,000.
7. Finished goods inventory balance on January 31 was $44,700.
Required:
a) Determine the predetermined manufacturing overhead rate.
b) Determine the amount of materials purchased during January.
c) Determine cost of goods manufactured for January.
d) Determine the work in process inventory balance on January 31.
e) Determine cost of goods sold for January.
f) Determine whether manufacturing overhead is overallocated or underallocated and by what amount at Jan. 31.

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Definitions:

Manager

An individual responsible for directing, controlling, and administering an organization or group, overseeing tasks, and making decisions.

Confirmation Error

The tendency to seek confirmation for what is already thought to be true and not search for disconfirming information.

Selective Perception

The tendency to define problems from one’s own point of view.

Preexisting Opinion

A belief or judgment formed before obtaining full or certain knowledge, often influencing how new information is interpreted.